Anti-government extremists have long tried to avoid paying taxes,
but in recent years some of them have focused on paying off everything
from mortgages to credit cards to utility bills the quick and easy
way -- with bogus sight drafts; essentially, bad checks.

The scheme doesn't hold up for long. Eventually, the
person or company that was paid with the phony sight draft realizes
it's worthless and takes action, says assistant prosecutor Dan Kasaris
of the Cuyahoga, Ohio, county prosecutor's office.

"The problem is these things look so legitimate.
We've had people take them to the county treasury office and use
them to pay their taxes. The treasurer takes them, stamps them,
and sends them off for processing. You get an initial credit that
you paid the tax, and then the credit is reversed."

"The IRS will let one through, and very often
private individuals or companies will accept them because they look
extremely realistic."

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A sight draft looks like a check. It's payable on
demand (on sight) and, sometimes, no signature is needed. Legitimate
sight drafts are often used in international trade.

Twisted vision of history
The anti-government types apparently latched onto sight drafts to
accommodate their belief that the U.S. government owes every American
citizen a substantial amount of money.

The theory, called redemption or acceptance for value,
says that legitimate constitutional government ended when the U.S.
went off the gold standard in 1933.

The extremists believe the government had to find
some other way to pay off its debts. It did this by using the energy,
or work output, of its current and future citizens as collateral.
The government pledges each birth certificate for an amount that's
been quoted anywhere from $600,000 to $1 million.

Pitcavage says redemptionists believe that everyone
in the U.S. is collateral for bonds issued by the U.S. government.
The bondholder doesn't own you, but he or she owns everything you
do. Each person has a mirror entity, a straw man that represents
the amount of work they do.

Redemptionists say there's a way to redeem your straw
man and stake your claim to that money. Simply file a particular
document along with your birth certificate and hand it in to your
secretary of state office.

Now, you control your straw man and all the money
that goes with it. You now can print up a sight draft and pay off
your mortgage, according to redemptionists.

Proponents of this fraud hold seminars around the
country explaining the straw man theory and charging cash to redeem
the straw man for participants.

"Initially, the person is a victim," says
Kasaris. "They pay the teacher to have their straw man redeemed.
Then once they get their straw man redeemed, they float these bogus
drafts and the victim becomes the defendant.

"The teacher got a $128,000 sight draft to pay
off his mortgage with Chase. He gets the mortgage statement the
next month and it says it's paid off. He goes to a seminar and shows
them the mortgage statement and says, 'Look what using sight drafts
did for us.'

"What they don't show them is a month or two
later, the bank says we have revoked your credit because your check
bounced."

Meanwhile, the folks attending the seminar are forking
over 10 percent of their mortgage to get their straw man redeemed.
After they try to pay the mortgage with a bogus sight draft they're
out the 10 percent, they're facing foreclosure and, worst of all,
facing criminal charges for writing a phony sight draft.

Pitcavage says this particular scheme took root around
1999 and has caught on as a way to pay off everything from taxes
to cars, boats, homes and weapons.

"One of the nastiest versions is they'll sell
a sight draft to someone who's vulnerable and gullible -- someone
who's about to lose their home or farm," says Pitcavage. "They'll
say, 'You give me $5,000 and I'll give you this debt instrument
to pay off your debt; then you can make lower payments to me.'"

Of course, the fraudster takes off with the $5,000,
and the homeowner loses his money and the house.

Spotting a sight draft
Bogus sight drafts used by redemptionists have similar identifiers.
They may refer to House Joint resolution 192 (the resolution Congress
passed in 1933 taking the government off the gold standard), the
Uniform Commercial Code (a statute that deals with commerce, the
sale of goods, and negotiable instruments in commerce), and they
usually list United States Treasury, 15 & Pennsylvania Avenue.

Sometimes, the folks who print sight drafts like to
give themselves plenty of options.

"When they create their documents they put three
or four boxes on the left side that say money order, sight draft,
check -- they check a box and call it whatever they want. Whatever
it is, it's forgery because it's not drawn on a valid account,"
according to Kasaris.

Perpetrators of this fraud have been arrested and
convicted in Ohio, Michigan, Oregon and Idaho. Kasaris says most
of the people involved are over 50 and have had some sort of tax
problem.

"It really works on people who are down on the
government, taxes and their luck. But we've had police officers
involved -- one was sentenced to two years in prison. It's getting
bigger and bigger. We're finding more people involved and more people
getting duped."

When people believe they have hundreds of thousands
of dollars to draw on they can get greedy and stupid.

Kasaris says one couple walked into a Cleveland Cadillac
dealership in 1999 and tried to buy eight cars with a bogus sight
draft. They were arrested and convicted. Two years later, three
men were nabbed when they tried to use a bogus sight draft to buy
three Caddies at the same dealership.

The moral of this story -- if someone tries to pay
a debt to you with a sight draft, have it thoroughly checked before
accepting it for payment. If it has any of the previously mentioned
identifiers, it's probably phony.

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